Who is the actual beneficiary of your annuities?

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PostPosted: Fri Jul 15, 2011 7:17 pm   Post subject:   

Form 706 says nothing about insurance proceeds as property, only as value. "Part 5, Recapitulation".



You have a wonderful understanding of ESTATE TAXES . . . but that's not true of PROPERTY LAW. You demonstrate your confusion here:



Quote:
At death, the value of the money is part of the estate. The fact that it ultimately may get paid directly to a person doesn't change the fact that the money is part of the estate.




You should read what the IRS says about estate tax:
Quote:
The Estate Tax is a tax on your right to transfer property at your death.




The value of the money is one thing, the money itself is entirely another. Money is property. It has value. A life insurance contract is property. It has value. The property is what is transferred, the value is what is owned by the decedent's estate. If there is cash money IN THE ESTATE and due to be transferred to others, it must first be used to satisfy debts of the estate, and tax claims have a priority over all other claims except wages owed to employees.



But life insurance/annuity proceeds that are not payable to the estate are never the "property" of the estate and cannot be used to satisfy debts of the estate -- they become the property of the beneficiary at the exact moment of the death of the insured/anniuty owner/annuitant. At the moment of death the contractual rights of the life insurance policy transfer to the named beneficiary, but the value of the contract remains with the decedent's estate, if the insured had any "incidents of ownership" prior to death.



As I have said REPEATEDLY, and which you cannot get through your dense brain matter, the PROPERTY of the proceeds is that of the beneficiary, not the estate of the decedent. All the estate owns is the value of the money.



Quote:
His only assets are a $10,000,000 insurance policy with his mom as beneficiary, a $5,000,000 IRA with his mom as beneficiary, and a $10,000,000 bank account that is a transfer on death account with him mom as beneficiary.




Please don't mix IRA money and bank accounts -- which are considered "income in respect of a decedent" -- into the discussion with life insurance proceeds payable to a beneficiary. But to help you with this . . .



Quote:
The IRS and Max's state (if there is a state estate tax) will go after Max's mom for the money.




Income in respect of a decedent is taxable to the person who receives it, but according to the IRS (Publication 559 -- let's talk about real guidance, not forms),



Quote:
This income in respect of a decedent is also taxed when received by the recipient (estate or beneficiary). However, an income tax deduction is allowed to the recipient for the estate tax paid on the income.




Nowhere in Publication 559 does the IRS equate insurance proceeds payable to a named beneficiary "income in respect of a decedent."



The only claim the government has is on the estate of the decedent. They cannot go after the personal property of another person. The estate owes the tax money to the government, and the executor of the estate has to figure out how to do that. But not on the backs of the beneficiaries of the estate or of insurance proceeds.



The ONLY exception to this that I am aware of is the Government's right to seek recovery of its prior laid income tax liens on the PROPERTY of the decedent, which can include the interest the policyowner has in life insurance CASH VALUE prior to death. In that singular circumstance, the US Supreme Court has held that the Government has the right to recover its lien from the proceeds that were paid to the beneficiary, even though those proceeds are protected under state law from the claims of the decedent's creditors. But they cannot "attack" any other property of the beneficiary. [ United States v. Bess, 357 U.S. 51 (1958) ] The theory of the Court was that during the insured's lifetime, he could have taken the cash value from the policy to satisfy the tax lien. This would have effectively placed a lien on the proceeds payable to the beneficiary, and the beneficiary would be in the same position (financially) after the payment of the proceeds.



Your utter ignorance of estate tax law is glaring and, here, completely exposed to the light -- because you don't understand words and their meanings!



If you would like further proof of THE COMPLETE AND TOTAL FALSITY of your statement that the "IRS and [the] state will go after [the beneficiary] for the money", read the following:



Quote:
Recipient of pay-on-death account funds not liable for estate taxes, Supreme Court holds



By Joe Forward, Legal Writer, State Bar of Wisconsin



May 7, 2010 – Under federal and state tax law, the recipient of a pay-on-death (P.O.D.) account is not required to reimburse the decedent’s estate for taxes paid, the Wisconsin Supreme Court recently held.



In Estate of Sheppard v. Schleis, 2009AP1021 (May 4, 2010), the supreme court – in an opinion by Chief Justice Shirley S. Abrahamson − applied federal and state tax law to affirm the Circuit Court for Washington County, which granted summary judgment to the recipient of P.O.D. accounts totaling approximately $3.8 million.




Do you even know what "summary judgment' means? It means that no testimony or evidence is required for the court to make its decision. In this case, the decision was based entirely on a combination of FEDERAL AND STATE LAW.



Although you'll probably claim that the "legal writer" who wrote the article is wrong, if you are interested in reading that entire article, here is the link: http://www.wisbar.org/AM/Template.cfm?Section=News&Template=/CM/Conten tDisplay.cfm&ContentID=92793



This is merely one of dozens that are similar that I could provide.



So do yourself a favor, and take a class in property law and another in estate tax law before you continue to go around mixing up discussions of property rights and estate taxes.



And, while you're at it, take courses in contract law and life insurance beneficiaries, because you have no idea of these subjects when you write:



Quote:
At the moment of death, the money doesn't belong to the beneficiary because they haven't yet made a claim. This isn't just semantics




Really? To whom does it belong? The estate? The insurance company? No, it's not semantics, it's the ravings of a lunatic.



Quote:
At death, the value of the money is part of the estate.




Imagine that! You finally make the only correct statement you have ever made, which is EXACTLY what I have stated numerous times in prior posts.



But then you go right back to semantics class and screw up the whole thing again when you write:



Quote:
The fact that it ultimately may get paid directly to a person doesn't change the fact that the money is part of the estate.




Now, if you want to go back to semantics class, answer this question: How is the PROPERTY of the policy proceeds part of the estate if the money remains with the insurance company (because the beneficiary has not yet made a claim)?



Answer: It is not.



And, it is also not the property of the insurance company simply because the beneficiary has not yet made a claim. The insurance company has no property interest in the proceeds -- but the beneficiary does, regardless of when the claim is filed. The policy proceeds represent a contractual right to property instantaneously owned by the beneficiary at the moment of death.



That's the whole point. This whole useless diatribe you have created is because you LOVE TO ARGUE SEMANTICS, especially when it has nothing to do with the discussion. And here, you're 100% wrong except when you make the singular statement:



Quote:
At death, the value of the money is part of the estate.




The only one who needs to admit their error is you.



There is a famous saying among college professors who teach Greek: You can't teach a pig Greek; it infuriates the professor . . . and annoys the pig.



But that's OK, I am only mildly infuriated.


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PostPosted: Mon Jul 18, 2011 10:26 pm   Post subject:   

It's good to see somethings never change Wink

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PostPosted: Mon Jul 18, 2011 10:52 pm   Post subject:   

Nice to have you back! Care to comment further? Shocked



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PostPosted: Mon Jul 18, 2011 11:35 pm   Post subject:   

It's going to take me a while to read through the above. I'm sure I'll find something to comment on though. Laughing

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PostPosted: Fri Aug 05, 2011 11:59 pm   Post subject: father girlfriend claim to be wife at death  

father died and left a will i was benificary i got his survivor pension she got the bank account his will stated I was his sold benificary and one and only love but his girlfriend was his companion and wife. I called the annunity and since he was not married thry were going to give it to me but she is claimming to be wife and she got it she andI were both benificary on the auunnity with new york life how do I change this or change wife status I computer paer were she called a company and claimed she was not married she has irs forms clainin to be his wife I dispute that that has to for tax reason only I beleive


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PostPosted: Sat Aug 06, 2011 1:30 am   Post subject:   

Unless the annuity was holding a qualified retirement account's assets, there is NO AUTOMATIC SPOUSAL ENTITLEMENT to insurance proceeds of any kind. If NY Life paid money to someone, whether child, spouse, girlfriend, or next door neighbor, it was because that person was named as a beneficiary.



If there was no named beneficiary, then the matter would be resolved through probate. It is not up to the insurance company to decide who gets money and who doesn't in such a case.



So there is either more to the story that you haven't revealed, or you don't have all the facts. Insurance proceeds cannot be designated by will -- only the net estate assets.



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PostPosted: Sun Aug 07, 2011 1:27 pm   Post subject: new york life payment to girlfriend  

she and i were both named benifiary and I beleive this was a retirement account I was told that she is his wife and she get because she is primany benificary and if she died I would of gotten it because I was second benificary .I dont understand I thought a benificaary was a benificary and it should be splited.

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PostPosted: Sun Aug 07, 2011 2:04 pm   Post subject:   

If this was a retirement account, then, yes, the spouse is the de facto primary beneficiary. You were probably listed as the contingent beneficiary.



Contingent beneficiary = "second" or "secondary" beneficiary. A contingent beneficiary is not equal to the primary beneficiary. Imagine a two-story house. The primary beneficiary is on the top floor, and the contingent beneficiary is on the bottom floor. When the money falls out of the sky, the person on the top floor will receive it. The person on the bottom floor only receives the money if there is no one on the top floor to claim it.



Quote:
I thought a benificaary was a benificary and it should be splited.




You are correct, you don't understand. Primary and contingent beneficiaries do not "split" or "share" proceeds. A contingent beneficiary only receives proceeds if there is no living primary beneficiary at the time of a person's death.



Life insurance and annuity proceeds are not designated by will. They are designated by the beneficiary statement. If there is no named beneficiary or contingent beneficiary (or none survive the insured/annuitant), the proceeds are distributed from the estate of the decedent via probate. A will may or may not determine the distribution in such a case, it is merely guidance to the probate court as to what the decedent would have preferred.



Creditors of the decedent in such a case have more rights than family members, which is what makes the beneficiary statement so important. This is the reason that federal law gives special preference to spouses when it comes to retirement accounts. Girlfriends and spouses are not the same thing. If married, a spouse must give written consent to be removed as the primary beneficiary. But an unmarried person may name anyone of their choosing as the beneficiary of their retirement account.


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PostPosted: Fri Sep 02, 2011 4:41 pm   Post subject: father pass girlfriend poses as wife  

this account is ira tranfer account to annuuity account and and girlfrind claim to be wife and to annuity is there any thing I can do I have found paperwork were she claims she neer married him but claim she is wife in our state there is no common law and probate is done and the copy of paperwork the I received about his application is not his writing and it does not look like his signature please advise the form claim spouse receives benificary she is claiming spouse There is a contingent benificary I sent this and the letter I have were she claims she never married him to the insurance conpany and they ssid she is the benificary


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PostPosted: Sat Sep 03, 2011 1:50 pm   Post subject:   

What is your connection to all this? If a person is unmarried, they may name anyone or anything as an IRA beneficiary.



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PostPosted: Tue Dec 30, 2014 6:17 pm   Post subject: beneficiary  

In ohio if you marry and already have an IRA rollover, annuity and any other retirement account, do you need to change the beneficiary to your new husband or can you leave it to your child as intended prior to marriage.


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PostPosted: Mon Jan 05, 2015 8:17 pm   Post subject:   

You probably do not need to change your Rollover IRA, and probably don't need to change the annuity. However, any employer-sponsored retirement account governed under ERISA depends on the Summary Plan Description to determine who the beneficiary is.



Some plans automatically make a spouse the beneficiary, and if you don't want that, then you have to get your spouse to sign a waiver of his/her rights to the account. If you no longer work for the employer, then you may want to consider transferring the account into your existing Rollover IRA account, which may still require your spouse's signature to waive any claim to the account.



When in doubt, you can always consult an estate planning attorney.



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PostPosted: Wed Jan 14, 2015 10:07 pm   Post subject: Annuity  

In 2012 my boss listed myself and (5) others as beneficaries of some annuities that he had. Sadley he pass away in 2014. It has been over a year now and we have still not been issued the proceeds from the annuities. Apparently his daughter filed claim for them on behalf of his surviving wife, whom also was listed as beneficary on some other annuities, and it will now go through an interpleader action. My question is will it be likley that these proceeds will not be paid to the listed beneficaries and will this interpleader action be a long drawn out process? Max seems to be very knowledgable about this and has already answered some of the questions I would have had.


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PostPosted: Thu Jan 15, 2015 7:50 am   Post subject:   

You don't mention what state this involves.



An interpleader action is too complex to attempt to handle on your own. Normally, they are filed in Federal District Court because the insurance company is not a "citizen" of the state where the action is taking place, or the litigants ("respondents") are citizens of different states, or both. You will need an attorney who specializes in Estate/Probate law and who has been admitted to the Federal Bar. That attorney will be better able to answer your questions in the context of applicable state law.



If the decedent and his wife were residents of one of the handful of Community Property states, AND the premiums were paid with Community Assets, then the surviving spouse is probably entitled to at least half of the annuity death benefit, which should be equal to or higher than premiums paid prior to death.



A surviving child who is not a named beneficiary, regardless of the state of residency of the decedent, probably has no entitlement to annuity proceeds unless they are payable to the estate of the decedent. But your attorney will know the answer to this.



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PostPosted: Wed Jan 21, 2015 9:59 pm   Post subject:   

Apparently this interpleader action will be filed in Kansas. This is where my boss had got the annuities. I was told that so long as there is proof, in which there is, that his widow has a very substantial amount of assets from his estate, buildings and homes that have been sold, as I mentioned before, other annuities, and a handful of other things, that there is a chance that we will still recieve the funds. The main question with everyone is how this was able to be done and how long it will take to find out.


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